Obama's "American Recovery and Reinvestment Plan" states this in Appendix 1 of the plan: "We considered multipliers for the case where the federal funds rate remains constant, rather than the usual case where the Federal Reserve raises the funds rate in response to fiscal expansion, on the grounds that the funds rate is likely to be at or near its lower bound of zero for the foreseeable future."
Please tell me this is a joke. Does Obama really believe that the Fed can hold interest rates at zero for four years, and the federal government can spend, spend, spend like there is no tomorrow, while the bond market blithely looks on at $1-2 trillion federal deficits annually and the economy will begin to recover? Obama, you are kidding, right? Unfortunately, he is not kidding, yet that premise forms the foundation of his economic and recovery plan.
Rates are going up. It's just a manner of time. Treasury securities are just another bubble waiting to burst! That is why I believe in either shorting TLT or buying the double inverse ETF, TBT. I will have more information on TBT in a future post.
Source: The Market Ticker
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